Stop Insider Trading Act (HB7008)

The American Council supports HB7008, the Stop Insider Trading Act, and urges every Senator to vote yes. The bill has two operative titles: one addressing congressional stock trading and one addressing federal election photo identification. Both are summarized below in full, because a constituent or a legislator's staff member deserves a complete picture of what they are being asked to support.

Who is covered by the trading restrictions. Section 2 adds a new Subchapter IV to chapter 131 of title 5. The trading rules apply to "covered individuals," defined as Members of Congress, their spouses, and their dependent children. The term "covered investment" means a security issued by a publicly traded company, or any comparable economic interest acquired through synthetic means, such as a derivative, including an option, warrant, or other similar means. Four categories are excluded from that definition: (1) excepted investment funds as described in existing section 13104(f)(8), such as diversified mutual funds; (2) any fund that would qualify as an excepted investment fund but fails the diversification requirement solely because it is concentrated in the United States or in the covered individual's state, territory, or the District of Columbia; (3) an interest in a small business concern as defined under section 3 of the Small Business Act; and (4) investments held in a trust where no covered individual has any authority over a trustee, including the authority to appoint, replace, or direct the trustee's actions, and the trustee is not the spouse, child, parent, or sibling of a Member of Congress. The bill also incorporates existing statutory definitions of "publicly traded company," "security," and "supervising ethics office" by cross-reference.

The purchase ban. Except as provided in the exceptions subsection, no covered individual may purchase a covered investment while serving in federal office. This is a flat prohibition; it does not distinguish between large and small purchases or between the Member and a family member who is also a covered individual.

The pre-sale notice requirement. No covered individual may sell a covered investment unless the Member of Congress files and publicly discloses a notice of intent to sell at least 7 calendar days and no more than 14 calendar days before the sale. The notice must include the projected date of sale, a description of the sale, and the number of shares. If the covered individual decides not to proceed, the Member who filed the notice must withdraw it before the notice period expires. Members of the House (including Delegates and the Resident Commissioner from Puerto Rico) file with the Clerk of the House; Senators file with the Secretary of the Senate. Both the notice and any withdrawal must be made publicly available on the applicable official's website upon receipt.

Exceptions to the purchase ban and sale notice requirement. Two categories of exceptions exist. First, an occupational exception: notwithstanding the purchase ban and the sale notice requirement, a spouse or dependent child of a Member may trade any covered investment if that covered investment is (A) not owned by a covered individual and the trade is performed as a function of the spouse's or dependent child's primary occupation, or (B) made as part of compensation from an employer of that individual or in furtherance of any fiduciary or occupational obligations of that individual. Note that condition (A) requires both that the investment not be owned by a covered individual and that the trade be a function of primary occupation; condition (B) is a separate, independent path that requires employer compensation or fiduciary or occupational obligation. Second, a dividend reinvestment exception: the purchase ban does not apply to a covered individual with respect to a transaction for the purpose of reinvesting dividends received from a covered investment into the same covered investment automatically or without delay. The dividend reinvestment exception applies only to the purchase ban in subsection (a), not to the sale notice requirement in subsection (b).

Enforcement, penalties, and payment restrictions. Any covered individual who violates section 13152 with respect to a covered investment is subject to enforcement at the direction of the supervising ethics office. Two consequences follow. First, the responsible Member of Congress (meaning the Member who caused the violation, or the Member who is the spouse or parent of the covered individual who caused it) must pay a fee equal to the greater of $2,000 or ten percent of the value of the violating transaction, plus any net gain realized from the covered investment during the period beginning on the most recent date the individual became a covered individual and ending on the date of disposition, as determined by the supervising ethics office. Second, in the case of a purchase in violation of the ban, the covered individual must sell the improperly purchased investment. Members may not pay these fees using their Members' Representational Allowance, their Senators' Official Personnel and Office Expense Account, any campaign contribution accepted as a candidate, or any donation received as support for their activities as a holder of federal office. All fees collected are deposited in the general fund of the Treasury as miscellaneous receipts under 31 U.S.C. 3302(b). If a former Member resigns or retires before paying a fee, the supervising ethics office may refer that person to the Department of Justice, and existing civil penalty provisions under section 13106 apply in the same manner and to the same extent as a violation under that section. Each supervising ethics office may also issue interpretive guidance on the new subchapter and may consider mitigating or aggravating circumstances in doing so.

Effective date for trading restrictions. Section 2 and its amendments take effect 180 days after enactment.

Photo identification for federal elections. Section 3 adds a new section 303A to the Help America Vote Act of 2002. For in-person voting in federal elections, the appropriate state or local election official may not provide a ballot unless the individual presents a valid physical photo identification. An individual who does not present the required identification may cast a provisional ballot, but that ballot may not be counted as eligible unless, within 3 days after casting it, the individual presents either (I) the required photo identification or (II) a state-developed affidavit attesting that the individual does not possess the required identification because of a religious objection to being photographed. Nothing in this provision limits other grounds on which provisional ballots may be cast or counted under existing law.

Mail and absentee voting requirements. For voters who vote other than in person in federal elections, the official may not accept a ballot unless the individual (i) submits a copy of a valid photo identification, or (ii) submits the last four digits of their Social Security number along with a state-developed affidavit attesting that the individual is unable to obtain a copy of a valid photo identification after making reasonable efforts to do so, or (iii) includes a notarization by a notary public attesting that the individual has personally marked the ballot. These three paths are alternatives: meeting any one of them satisfies the requirement. Two categories of voters are exempt from the non-in-person requirement: absent uniformed services voters as defined in the Uniformed and Overseas Citizens Absentee Voting Act, and individuals provided the right to vote otherwise than in person under the Voting Accessibility for the Elderly and Handicapped Act.

Digital imaging access and voter notification. State and local government officials must ensure, to the extent practicable, public access to a digital imaging device (including a printer, copier, image scanner, or multifunction machine) at state and local government buildings, including courts, libraries, and police stations, so that individuals may copy their photo identification at no cost. Each state must also notify individuals of the photo identification requirements at the time they apply to register to vote in federal elections; for online registration, the system must provide this notification before the individual completes the registration process.

Definition of valid photo identification. The bill defines "valid photo identification" for these purposes to include: (1) a valid state-issued motor vehicle driver's license bearing the individual's photo and an expiration date; (2) a valid state-issued identification card bearing the individual's photo and an expiration date, issued by a state motor vehicle authority; (3) a valid United States passport; (4) a valid photo identification card issued by the Department of Defense or the Department of Veterans Affairs; and (5) a valid identification document issued by a Tribal government bearing the individual's photo and an expiration date.

Conforming amendments and enforcement expansion. Section 3 also amends HAVA section 401 to extend the existing civil enforcement mechanism to cover all of subtitle A of title III rather than only the previously enumerated sections 301, 302, 303, and 304. A conforming amendment to section 311(b) addresses voluntary guidance timelines for the Election Assistance Commission with respect to the new section 303A.

Effective date for photo identification requirements. Section 3 and its amendments take effect 90 days after enactment.

The American Council believes this bill addresses two distinct accountability failures: the ability of those who write federal law to personally profit from the information that power gives them, and the lack of a uniform identity verification standard for federal elections. We hold that those who serve the public must be visibly bound by constraints the public does not face, and that elections earn their authority from the confidence voters place in them. Both titles of HB7008 move in that direction, and we ask every Senator to vote yes.